GST Applicability on Apartment Associations – Clarification by Finance Minister

Graphic illustrating GST applicability for apartment owners associations, featuring a central house icon and two smaller house icons, with text 'APARTMENT OWNERS ASSOCIATION' at the bottom.

GST Applicability to Apartment Associations:

  1. Registration Requirement:
    • Apartment Associations are required to register under GST if their aggregate turnover (from goods and/or services) exceeds:
      • ₹20 lakhs in general category states
      • ₹10 lakhs in special category states
        (As per Section 22(1) of the CGST Act, 2017).
  2. Exemption on Maintenance Charges:
    • Services provided by an apartment association to its own members are exempt from GST if:
      • The maintenance charges do not exceed ₹7,500 per month per member, and
      • The aggregate turnover is below the registration threshold
        (As per Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, Sl. No. 77).
  3. GST on Charges Above ₹7,500:
    • If maintenance charges exceed ₹7,500 per month per member, the entire amount becomes taxable at 18%, not just the amount exceeding ₹7,500.
      (Taxable under Heading 9995 of the scheme of classification of services, per Notification No. 11/2017-Central Tax (Rate)).
  4. Liability Lies on Association, Not Residents:
    • The residents are not responsible for GST compliance. The association, as the supplier of services, is liable for GST compliance.
  5. Historical Context:
    • Initially, the exemption threshold was ₹5,000, later increased to ₹7,500 based on the recommendation of the 25th GST Council Meeting held on 18 January 2018.
  6. Relief and Awareness:
    • The government provides an opportunity for reduced or no penalty if taxpayers voluntarily pay due tax.
    • Regular awareness programs and “Taxpayer Samvad” are conducted to support compliance.
    • No requirement under the CGST law to obtain any letter from residents regarding GST status.

This clarification is backed by:

  • Section 22 of CGST Act, 2017 – Registration threshold
  • Notification No. 12/2017 – Central Tax (Rate) – Service exemptions
  • Notification No. 11/2017 – Central Tax (Rate) – Taxability of services
  • Circulars & GST Council Recommendations